internal ratings based approach (IRB) for credit risk; CVA risk; operational risk; an output floor; and the leverage ratio. The GHOS announced in March 2020 that the implementation date of these reforms, which were originally set to be effective at the start of 2022, was delayed to 1 January 2023. Implementation Summary of originally-proposed changes (2010) in Basel Committee language First, the quality, consistency, and transparency of the capital base will be raised. Tier 1 capital: the predominant form of Tier 1 capital must be common shares and retained earnings. This is subject to prudential deductions, including goodwill and intangible assets. Tier 2 capital: supplementary capital, however, the instruments will be harmonised. Tier 3 capital will be eliminated. Second, the risk coverage of the capital framework will be strengthened. Promote more integrated management of market and counterparty credit risk Add the credit valuation adjustment–risk due to deterioration in counterparty's credit rating Strengthen the capital requirements for counterparty credit exposures arising from banks' derivatives, repo and securities financing transactions Raise the capital buffers backing these exposures Reduce procyclicality and Provide additional incentives to move OTC derivative contracts to qualifying central counterparties (probably clearing houses). Currently, the BCBS has stated derivatives cleared with a QCCP will be risk-weighted at 2% (The rule is still yet to be finalized in the U.S.) Provide incentives to strengthen the risk management of counterparty credit exposures Raise counterparty credit risk management standards by including wrong-way risk Third, a leverage ratio will be introduced as a supplementary measure to the Basel II risk-based framework. intended to achieve the following objectives: Put a floor under the buildup of leverage in the banking sector Introduce additional safeguards against model risk and measurement error by supplementing the risk based measure with a simpler measure that is based on gross exposures. Fourth, a series of measures is introduced to promote the buildup of capital buffers in good times that can be drawn upon in periods of stress ("Reducing procyclicality and promoting countercyclical buffers"). Measures to address procyclicality: Dampen excess cyclicality of the minimum capital requirement; Promote more forward looking provisions; Conserve capital to build buffers at individual banks and the banking sector that can be used in stress; and Achieve the broader macroprudential goal of protecting the banking sector from periods of excess credit growth. Requirement to use long-term data horizons to estimate probabilities of default, downturn loss-given-default estimates, recommended in